If President Obama thinks his proposal to place a $3 million cap on tax-deferred retirement plan contributions will help boost government coffers, he might want to review a Congressional Budget Office report that tells an altogether different story.
Obama's proposal – released just ahead of his recent State of the Union and a rehash of an idea the White House tossed into the mix last year – was lauded by some as a way to prevent the abuse of tax loopholes by the ultra-rich. Others said the idea could, in fact, create a host of potential unintended consequences that would harm middle-class investors.
Either way, the CBO report plainly says that any reduction or removal of tax-deferred incentives for retirement plans could actually lead to an eventual net loss in tax revenue for the government.
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